The cooperative business model works for today’s global economy

By Dame Pauline Green

For nearly 200 years, cooperatives have been creating jobs across the world. Currently over 100 million of the world's citizens are employed within a cooperative. That's more jobs, I'm told, than provided by all multi-national businesses put together. So as our leaders look for job creation initiatives to restore hope to the unemployed, we must point out that the cooperative model of business can do so much more.

Cooperatives since their inception have not sought to imitate their corporate competitors and solely maximize profits, but rather to meet the needs of their member-owners. Those member-owners number nearly 1 billion people across the globe. Contrast that with the 327 million individuals who are shareholders in companies listed on the world's stock markets.

Cooperative businesses are built on the globally accepted principles of sound democracy; a commitment to an economic return to members based on their trade with the business, not the size of their shareholding; and a wider social engagement as a core part of our DNA. We help to reduce conflict, build community cohesion, build skills and expertise, develop local leadership potential, and support women in positions of economic activity and leadership. Cooperatives have taken millions out of poverty with dignity, by helping them to build their own cooperative enterprises. In effect, we have been building civil society.

Our commitment to our democratic and social agenda is built on a sound and successful member-owned business model that competes successfully in the marketplace. Successful cooperatives today operate in some of the most competitive industries in the world: banking, insurance, agriculture, retail, health and energy.

We need to make the case to decision-makers that we can no longer depend on one dominant model of business. The global economy needs a diversity of corporate structures to ensure a better-balanced, more sustainable economic model going forward. The cooperative movement is the most pre-eminent of those other corporate structures with a reach into every corner of the world.

During the global financial meltdown over the last four years, our cooperative financial institutions, including credit unions, have fared much better than their competitors. Our financial institutions have overwhelmingly come through this crisis stronger.

Our model of business is sustained because it is a huge and growing network of local, autonomous, sovereign businesses, in a multitude of different sectors of the economy, that have developed according to local needs, local culture and member demands. While our investor-led competitors are duty bound to maximize profits and must worry about stock market and investor pressures, we are duty bound to serve our members. We can concentrate on giving our member-owners a good deal, rather than obsessing about maximizing profits for shareholders who are often both remote and disconnected from the business.

Our businesses keep surpluses in the business, give some back to the members according to trade and not shareholding, and we invest in the local community. We are about human need and not human greed. At a time when people are cynical of the political and economic model that dominates their lives — when they are looking for greater fairness, engagement and impact — cooperatives emerge as not only an effective governance model, but a compelling one.

We need to remind government that their role is to establish an economic legislative framework in which enterprise can thrive and prosper, and cooperative enterprise deserves equal treatment with any other form of business. We are not business as usual, but we are businesses.

About the Author

Dame Pauline Green is president of the International Co-operative Alliance and chairs the United Nations Advisory Panel for the International Year of Cooperatives. This is an excerpt from her keynote address to the National Rural Electric Cooperative Asso